Cristal Ball – The Future Of Credit

It is interesting to take at this time a quick inventory of where we are today in term of lending and the real estate market. In terms of banks and funds only the ones with conservative underwriting have been able to survive the turmoil. In regard to the market it seems that it is starting to price real estate portfolios values from banks and how much they have lost and will loose. With 12 months of data analysts are starting to be able to anticipate what can happen. In regard to real estate while we are going to continue see value to go down and a soft market as discussed previously Investors are making moves. Personally, I believe that we may see more problems but we may have seen the worst.

Today most of loans approved are FHA or agency loans secured by the Federal Government. In term of residential real estate very slowly lending is going to open up. However, I anticipate that next year is going to be a tight year. In regard to commercial real estate lending, while it is still happening, I also anticipate that its going to continue to be slow. Hard money and private funds that are able to take more risks will be an important source of financing for numerous borrowers.

Credit is going to continue to be very tight for 2009. Concretely this means that underwriting guidelines are going to be more specific with limited exceptions. This will apply across all the different lending categories. The most affected areas are going to be the stated programs and in particular self employed people are going to pay more for credit. Overall, while credit is going to be available its going to be more costly and more difficult to get. Working with lenders that are able to be flexible is going to be important. When working with hard money lenders loan officers and their client will benefit from their ability to be flexible.